Another former Carter's executive pleaded guilty Wednesday to conspiracy to commit securities fraud in a multimillion dollar insider trading scheme, prosecutors said.
Richard T. Posey, the children’s apparel maker’s former vice president of operations for wholesale sales, pleaded guilty in federal court in Atlanta to disclosing company information about upcoming earnings reports and other developments to another company official between 2009 and 2010.
U.S. Attorney Sally Quillian Yates said Posey gave the information to Eric M. Martin, Carter’s former head of investor relations, who bought and sold Carter’s stock based on the insider information.
In one example provided by prosecutors, Posey told Martin that Carter planned to announce in an Oct. 27, 2009 meeting that it was conducting an internal investigation into accounting problems and would be delaying its earnings release for the third quarter. Almost immediately after Posey tipped off Martin on Oct. 23, Martin sold all of his more than 35,000 shares of Carter’s stock, valued at about $1 million. When news of the internal investigation was made public on Oct. 27, the company’s stock fell more than 20 percent.
In December, Martin pleaded guilty to telling a former Wall Street analyst about the Atlanta-based company’s quarterly and annual financial results between 2005 and 2009. Prosecutors said the information Martin passed along included details of the clothier’s plans in 2005 to buy competitor Oshkosh B’Gosh prior to the acquisition.
Posey, 52, of Duluth, had also served as vice president of operations for several Carter’s brands and divisions. The company fired him in January 2013.
Securities fraud charges also have been filed against Joseph Pacifico, the company’s former president, and former Vice President of Sales Joseph Elles.
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